The Court May Use the Average of Alternate Valuation Methods to Value Goodwill

A divorce court does not need to rely on one valuation method to determine goodwill and may determine a value based upon an average of multiple methods.

In Marriage of Webb, husband operated a private investigation business founded during marriage. At the divorce trial, wife’s expert valued goodwill based upon the capitalization of excess earnings formula.  Husband’s expert testified that the business had no goodwill because no similar business had been sold in the area in many years.  The divorce court essentially split the difference between the two expert’s values, which the Court of Appeal affirmed because substantial evidence support that conclusion.

In re Marriage of Webb (1979) 94 Cal. App. 3d 335